Stock Markets January 27, 2026

S&P Lifts Texas Capital Bancshares Outlook to Positive, Affirms Existing Ratings

Agency points to diversification of revenue and stronger profitability, capital and risk metrics as drivers of outlook change

By Caleb Monroe TCBI
S&P Lifts Texas Capital Bancshares Outlook to Positive, Affirms Existing Ratings
TCBI

S&P Global Ratings has moved the outlook on Texas Capital Bancshares Inc. to positive from stable while affirming the company-level 'BBB-' rating and the bank subsidiary's 'BBB' rating. The upgrade in outlook reflects progress under a 2021 strategic plan that has broadened noninterest revenue and strengthened profitability, capital, funding and risk controls.

Key Points

  • S&P moved Texas Capital Bancshares' outlook to positive and affirmed 'BBB-' at the holding-company level and 'BBB' for the bank.
  • Noninterest income more than doubled since 2022 and represented 18% of revenue in 2025, driven largely by investment banking and trading.
  • Profitability and capital measures improved in 2025, with ROAA rising to 1.04% and a tier 1 capital ratio of 14.2% at year-end 2025.

S&P Global Ratings has revised its outlook on Texas Capital Bancshares Inc. to positive from stable and left unchanged the existing credit grades - a 'BBB-' at the holding-company level and 'BBB' for its bank unit, Texas Capital Bank.

The rating agency pointed to measurable progress against the strategic plan the company unveiled in 2021. That plan has led to greater revenue diversification and improvements across earnings, capital ratios, funding and liquidity, and risk management, S&P said.

Noninterest income has been a focal point of the transformation. In 2025, the bank reported adjusted noninterest income that was 9% higher than in 2024 and more than twice the level recorded in 2022. Noninterest income now accounts for 18% of total revenue, up from 10%, narrowing the gap with rated peers that typically derive more than 20% of revenue from sources outside interest income.

Within noninterest revenue, investment banking and trading were particularly strong contributors in 2025, making up almost 60% of that category. The company also expanded its footprint in treasury products, wealth management and asset management.

Profitability measures have trended upward. Return on average assets, on an adjusted basis, rose to 1.04% in 2025 from an adjusted 0.74% in 2024. S&P noted that ROAA peaked at 1.3% in the third quarter and 1.2% in the fourth quarter of 2025, exceeding the company's initial 1.1% ROAA target set in 2021. Return on average common equity for the full year improved to 9.6% from an adjusted 7.0% in 2024.

Capital levels remain solid relative to peers. The bank reported a tier 1 capital ratio of 14.2% as of December 31, 2025, and S&P calculated a risk-adjusted capital ratio of 12.0% as of June 30, 2025. The common equity Tier 1 ratio stood at 12.1% at year-end 2025, and management expects it to remain above 11% through 2026.

Asset quality metrics were described as strong. Net charge-offs were 20 basis points of average loans, while nonperforming assets amounted to 38 basis points of total assets. The allowance for credit losses covered nonaccrual loans by a factor of 2.8 times.

Funding and liquidity indicators have improved but the agency cautioned some measures remain below the median for rated U.S. banks. Uninsured deposits represented 43% of total deposits, and the ratio of loans to nonbrokered deposits was 88% as of September 30, 2025.

S&P said it could consider raising the bank's ratings if management sustains strong capital ratios, continues to diversify revenue, preserves profitability gains, achieves healthy deposit growth and avoids deterioration in asset quality.


What to watch - Continued execution against the 2021 strategic plan, trends in noninterest income composition, deposit growth dynamics and ongoing asset quality performance will be central to whether the positive outlook is converted into higher ratings.

Risks

  • Some funding and liquidity metrics remain below the rated U.S. bank median, including uninsured deposits at 43% of total deposits - a vulnerability for the banking sector.
  • The ratio of loans to nonbrokered deposits was 88% as of September 30, 2025, which underscores ongoing sensitivity to deposit dynamics in regional banking.
  • S&P indicated ratings could be at risk if the bank fails to sustain capital strength, revenue diversification gains, profitability improvements, deposit growth, or if asset quality deteriorates.

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